Hastings council rejects initial 2025-26 budget, later narrows property tax ask to avoid pink-card hearing

The Hastings City Council on Monday voted down the city’s first-reading annual appropriation ordinance for fiscal 2025-26 and initially declined the city’s proposed property tax request, then adopted a lower tax asking after extended discussion on budget priorities, reserves and service impacts. Council members voted 5–3 against Ordinance No. 4809 (the appropriation bill), and an initial resolution adopting the city’s full tax asking also failed 5–3. After further debate the council amended the tax request to a lower figure tied to the 2% plus growth threshold and approved that amended request 6–2. Council and staff repeatedly described the work as an attempt to balance operating needs, capital projects and cash reserves ahead of a statutorily required joint public hearing (the so-called “pink postcard” meeting). City officials said the administration’s presented budget would have kept the city’s levy at its current rate while producing a roughly $610,000 increase in total tax dollars because of higher property valuations. Finance staff and the city administrator told the council that leaving the levy unchanged while valuations rose produces a larger tax asking in dollars; city staff framed the administration’s plan as meeting growth plus inflation while using about $2 million of cash reserves for capital projects. “By leaving the levy the same, you’re automatically asking for the same percentage of increase in tax dollars as you are in the valuation increase,” a city staffer said during the discussion. The debate centered on three linked points: (1) how much of the city’s operating and capital plan to pay from reserves versus recurring revenue; (2) whether to trigger the required joint public hearing (mandated by recent state law) by submitting a tax asking that exceeds the 2%+growth safe-harbor threshold; and (3) what further operating cuts or fee adjustments the council would require if it rejected the administration’s proposal. After the ordinance failed, multiple council members asked administration to produce a revised levy/asking that would reduce the tax asking to the 2%+growth level, which staff calculated would lower the city’s tax asking by roughly $360,000 and set the levy at about $0.37909 per $100 of assessed valuation. Councilors and the mayor also discussed structural revenue options and near-term tradeoffs. The mayor and staff said they had reduced personnel costs through attrition and other cuts (about 13 positions removed, yielding roughly $800,000 in savings across funds) and trimmed operating budgets by roughly $309,000, but they said capital needs—including an in-progress city hall project and airport reimbursements—still required cash. Staff noted the city was moving roughly $2 million from an overfunded self-insured health fund back into departmental budgets per auditor guidance; they emphasized that money was not being used to mask an operating shortfall but to right-size internal reserves. One council member urged the city to seek new revenue streams, suggesting a restaurant sales tax and other fee increases as possible ways to grow recurring revenue rather than further depleting reserves. Public outreach and timing were part of the calculus. Under LB644 (the joint public hearing statute) and associated state deadlines, the county must receive taxing-entity information weeks before the postcard mailing; staff said the county’s deadline this year required a decision to be delivered in early September to make the postcard mailing schedule. Councilors split on whether to trigger that process. After the council narrowed the tax asking to the 2%+growth safe harbor and adopted the amended resolution, staff said that would avoid mandatory inclusion on the joint postcard and would reduce the immediate dollar increase requested from property owners. What happens next: staff will prepare a revised budget package consistent with the council’s direction and meet the state and county deadlines for tax notices and the joint hearing if required. The council’s action leaves open further edits to the appropriation ordinance; staff said a second and final reading schedule would follow statutory timelines. The council indicated it expects additional work on fees, possible further operating reductions and outreach to clarify which capital projects are funded from reserves and which are reimbursed by federal grants.